A Threat Behind Your Blackberry?

By Erin Lockett

This article examines some practical approaches to avoiding receipt of a competitor’s proprietary information –or loss of your own company’s proprietary information through electronic transport.

Electronic information belonging to a competitor could be lurking on your company’s computer system without your knowledge. Worse still, your trade secrets could be downloaded to a thumb drive and then exported to a competitor. Either scenario is likely to yield an explosion of expensive litigation, in which the process may cost much more than the actual harm.

Consider the following scenario: A company hires a new employee who had been working for a competitor. While the employee worked for the competitor, he created a few forms and compiled a list of customers he had worked with over the years. The employee also had some computer programs that he liked to use. Before the employee left, he saved all of this information on a “thumb drive.” Upon ending employment with the competitor, the employee was not asked to return any electronic data or provide a list of any data in his possession.

When the new employee starts work at the company, he is not briefed on any policy that prohibits him from using such data or otherwise asked about this type of competitor information. Without this warning, and without the new employer’s knowledge, he decides on his own to use the information on his thumb drive.

While this behavior appears to involve only a single employee using a single company computer, it is not. For example, if a company operates on a computer network, all of the information contained on an individual’s computer will be captured and replicated by the company’s server.

This scenario is playing out everyday and the influx of lawsuits is hard for the courts to keep up with. While employees have been leaving their jobs and taking information with them for years, the difference today is that this information is in electronic form (which leaves an electronic trail) and they’re getting caught – creating the appearance that the entire company had access to or was using the information.

Protections

An analogy for this situation is that of preventative measures to curtail the spreading of a disease.

Step one involves screening and evaluation of the employee to prevent the introduction of the proprietary information onto the company’s computer. Firms should consider having all new employees sign an agreement stating:

(1) the employee did not bring any information belonging to his former employer;
(2) the company did not ask the employee to bring any information belonging to his former employer;
(3) the employee understands that the company strictly prohibits bringing this type of information;
(4) the employee understands that he is not allowed to use any information belonging to his former employer; and
(5) the employee understands that use of such information is a direct violation of company policy for which the employee will be terminated.

Step two involves reasonable monitoring to achieve greater certainty that no proprietary information is introduced. This step involves the company’s IT department, and requires disclosures to be stated in the employee handbook.

Step three involves the action plan if the company discovers that the employee has brought proprietary information from a competitor over to the company.

If an employee is discovered to have proprietary information of a competitor’s, then the company must conduct an investigation into the exact information taken by the employee and whether it is present on its computer system. The company should immediately preserve all computer sources used by the employee and take steps to back-up and preserve its electronic data.

If the company finds that the employee has attempted to delete information, the company should take every step to recover that information. Computer forensic experts can assist in this effort. Preservation of evidence in this situation is of paramount importance, because if evidence is not preserved, the other side can use that fact to argue that terribly damning evidence existed (when it did not) and was simply destroyed by the employee or the company.

A competing firm will likely want to have its own expert examine the company’s electronic media sources, but this runs a risk of the competitor using a claim to justify the review of the trade secrets of the company. If the company acts quickly and is capable of documenting its analysis of what is and is not present, it will have a greater chance of preventing access by the competitor. In conducting the investigation, a general understanding of the possible legal claims is helpful.

Erin Lockett is an attorney with the Atlanta law firm of Foltz Martin